New report: Competitive bidding saving money for taxpayers and people with Medicare

April 19, 2012 | Industry News Release

Source: HHS

WASHINGTON – People with Medicare are already saving money on durable medical equipment (DME) through the Medicare competitive bidding program, according to a report released today by Health and Human Services Secretary Kathleen Sebelius.

According to the report, the program saved $202 million in its first year in nine metropolitan statistical areas – a reduction of 42 percent in costs and, as the program expands under the Affordable Care Act and earlier law, it could save up to $42.8 billion for taxpayers and beneficiaries over the next 10 years.

“Thanks to the Affordable Care Act, we can expand this successful example of health care reform to include more areas and achieve savings on a national level over the next few years. People with Medicare across the country will get the medical equipment they need to live their lives, while saving them and other taxpayers money in the process,” Secretary Sebelius said. “The law is already saving those with Medicare hundreds of dollars on their health care needs-- from medical equipment to prescription drugs—and they will continue to save in the years to come.”

The report also released results that show, after extensive monitoring by the Centers for Medicare & Medicaid Services (CMS), there have been no negative effects on the health of people on Medicare or their access to needed supplies and services.

“Seniors, and people with disabilities on Medicare, are saving money thanks to our successful competitive bidding program," said CMS Acting Administrator Marilyn Tavenner. "By expanding this successful program, we will save tens of billions of dollars for beneficiaries and taxpayers over the next 10 years."

Key information in the report:

Seniors, and people with disabilities in Medicare, will directly save a projected $17.1 billion due to lower co-insurance for durable medical equipment and lower premiums for Medicare over the next decade, while taxpayers are projected to save an additional $25.7 billion through the Medicare Supplementary Medical Insurance Trust Fund because of reduced prices.

In the first year of implementation in nine metropolitan statistical areas, through a combination of lower prices and fewer unnecessary services, the competitive bidding program saved Medicare $202 million.

Medicare beneficiaries in the nine areas had substantial reductions in their co-insurance for DME.

Last year alone, people with Medicare saved up to $105 on hospital beds, $168 on oxygen concentrators, and $140 on diabetic test strips.

A real-time claims monitoring system, set up to ensure that access to supplies was not compromised, has found that people on Medicare continue to have access to all necessary and appropriate items.

The Affordable Care Act expands Round 2 of the DME competitive bidding program from 70 to 91 metropolitan statistical areas across the country. CMS is evaluating bids from suppliers for the 91 areas. By 2016, all areas of the country will benefit from either the competitive bidding program or lower rates based on the competitively bid rates.